End of lockdown 2 has ‘limited spark’ and ‘different feel’ to lockdown 1

Hospitality’s second reopening weekend, marked by notably low footfall and cautious consumer behaviour, has had a “different feel and sentiment about it to that of lockdown 1,” UK Hospitality CEO Kate Nicholls has said.

Speaking at MCA’s The Conversation, Nicholls argued that whilst some media images may suggest otherwise, the sector hasn’t seen the same “rush to return” and “positive energy” coming from consumers as it did in July.

With 2% of businesses in tier 1, 40% in tier 3 and the remainder in tier 2, the trade body received feedback of a “very quiet” first week of trading, and about 50,000 pubs, bars and restaurants have not been able to trade at all.

Enhanced tier 2 restrictions have been the primary factor in reducing trade, and Nicholls said that the new rules were affecting far more than just wet-led pubs, as the unclear ‘substantial meal’ guidance influenced almost all hospitality sub-sectors.

“Consumers feel that if they were to go into coffee shops, restaurants, pubs, they have to have a substantial meal,” she said. “They interpreted that as being three courses and therefore they weren’t looking at going out.

“So, when they might have popped in for a drink, they weren’t going to, even if it was just for coffee.”

Even in those businesses where footfall was relatively high, Nicholls said sites were often “busy but not profitable” because of the single household rule, and although those with outside space did better, it was “not enough to lift the trade levels up.”

According to initial operator feedback, those able to operate in tier 3 reported revenues of -95% to -98%, and businesses in tier 2 saw revenues of -60% to -70% year-on-year.

“It’s very early days but we’ve had reports that operating with the new tier 2 restrictions are significantly worse than in October,” she said. “Tier 2 is much, much tougher, it’s closer to tier 3, and therefore there’s been further erosion of the revenue levels.”

With almost two thirds of his Kent-based pub estate subject to tier 3, Shepherd Neame CEO Jonathan Neame said in those sites able to operate, trade was “well below” where it was pre-lockdown.

“In tighter communities we’re seeing slightly better trade levels, where people may be more used to going out as couples,” he said. “But clearly, they are well below where they were when we shut on 5 November, when we were in tier 1 in the main, except for a few outlets in tier 2.

“Revenue levels have gone down a great deal, approximately half of what we’d expect this time last year, some worse than that, some better than that. It is quite early days but there has been a limited spark, or level of energy, compared to what we saw at the end of lockdown 1.”

Matt Grech-Smith, who’s Institute of Competitive Socialising operates mini-golf concept Swingers, agreed that last week’s second reopening did “feel completely different.”

“The sales are sluggish,” he said. “I think they’re going to pick up over the next couple of weeks, but then obviously we’ll close down again for Christmas, and I don’t know for sure what January looks like.

“It’s just a restriction too far this time around,” he added. “This round of restrictions is definitely the most onerous, and we’ve really seen the impact on our sales.”